Multi-Factor Investing: Intersectional vs Combination Models

Which one is superior?

Nicolas Rabener
10 min read
24 Aug 2026

SUMMARY

  • Long-short multi-factor funds are at all-time highs
  • Long-only smart beta funds have performed poorly recently
  • Significant differences between the intersectional and combination models

INTRODUCTION

Most investors should focus on asset allocation rather than stock selection, as beating the market seems exceptionally difficult. For fund managers mandated to pursue stock selection, however, factor investing is the only approach with meaningful support from financial research. Even this is challenging, though, since factor premia only manifest over the medium to long term, which naturally clashes with investors’ short-term expectations.

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